HDFC Bank share price dips 3% amid lower-than-expected Q1 results but brokerages are BULLISH about stock - Know REASON

The shares of HDFC Bank declined by over 3 per cent to Rs 1475 per share on the BSE intraday trade today, amid lower-than-expectation first-quarter results of banking heavyweight.

HDFC Bank, India’s largest private lender, on Saturday reported over 16 per cent year-on-year jump in standalone profit to Rs 7,729.64 crore for the June-ended quarter of the financial year 2021-2022 despite elevated provisions, as against Rs 6,658.62 crore in the same period a year ago.

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The Net interest income of Nifty heavyweight grew by 8.6 percent to Rs 17,009 crore year-on-year with loan growth of 14.4 percent and a core net interest margin of 4.1 percent. Higher other income and pre-provision operating profit along with NII supported the profitability of the bank in Q1.

The scrip at around 11:30 am was trading 2.74 per cent down to Rs 1479.75 per share on the BSE, as compared to a 0.77 per cent decline in the S&P BSE Sensex on Monday. The counter erased the last five sessions gain, which was around 2.5 per cent since July 12, 2021.

Despite lower than expected results, brokerages are still bullish on the stock. In this regard, CLSA maintains BUY call on HDFC Bank, with a target of Rs 1,850 per share. It mentions, manageable asset quality, but weak NII trends and loan and NII growth trends will be key to watch.

Similarly, Morgan Stanley also maintaining an Overweight on HDFC Bank raises the price target to Rs 2,000 per share. The brokerage says, NIM missed our estimates but was offset by higher fees, it reduced the EPS estimates by 2 per cent and mentions provisions are broadly in line.

The bank’s higher than expected provisions led to a PAT miss, says Goldman Sachs maintaining a Buy stance with a target of Rs 1803 per share. The brokerage mentions, better than expected operating performance with core PPOP 5 per cent ahead and sets a price target of Rs 1803 per share.

HDFC Bank in filing to exchanges said it held floating provisions of Rs 1,451 crore and contingent provisions of Rs 6,596 crore as of June 2021.